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China’s weak trade figures raise economic concerns

China’s latest set of weak trade figures on Thursday has heightened concerns about the strength of economic activity and the potential for further slowdown in 2024. However, iron ore prices have reached their highest level in Singapore in over a year, nearing $US134 per tonne (or more than $A200 per tonne). New data reveals a surge in iron ore imports into China, heading towards a new annual high with one month remaining.

The SGX futures market closed at $US133.75 per tonne on Thursday, following a small increase in prices from the previous Wednesday and the week before. Prices had previously hit $US136 per tonne in late November and have consistently remained above the $US130 per tonne mark, indicating China’s sustained appetite for imported iron ore.

Iron ore imports have already exceeded a billion tonnes in the first 11 months of the year and are on track to reach a new all-time high of around 1.180 billion tonnes by the end of the month. This would surpass the 2020 record of 1.108 billion tonnes and mark the sixth consecutive year of Chinese iron ore imports exceeding a billion tonnes.

This unexpected trend in iron ore imports has driven prices up by nearly 23% since the beginning of the year, despite challenges such as the property market crisis and the struggles of major contractors and developers in China.

China’s steel industry faces compressed profit margins, weak demand, and the weight of the property market collapse, yet iron ore imports continue to thrive. November saw a 3.4% increase in iron ore imports compared to October, reaching a near-record of 102.74 million tonnes.

Interestingly, China’s steel product exports remain at high levels, with November exports rising by 43.3% compared to the previous year.

China’s coal imports also surged in November, set to achieve a new all-time high. Customs data for November trade showed imports exceeding 43.5 million tonnes, a year-on-year increase of over 34% and a 21% rise from October. The total coal imports for the first 11 months of the year rose to 427.14 million tons, up 62.9% from the same period in 2022.

China’s copper imports in November displayed surprising strength, likely due to falling world prices in London and New York. Copper imports increased by 10.1% from October to the highest level in almost two years.

Despite weakening oil prices, China’s oil imports in November declined by over 9% compared to the previous year, primarily due to higher prices in October and high stocks within China. This marked the first annual decline in crude oil imports since April, with arrivals totaling 42.445 million tonnes or 10.33 million barrels per day. Year-to-date imports remained higher, up 12.1% from the previous year, reaching 515.65 million tonnes or 11.27 million barrels per day.

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